At the age of 17, most youngsters don’t have an inkling of their vocation. Not Ritesh Agarwal.
A year before his 18th birthday, Agarwal was managing his first hotel in Gurgaon. He started Oravel, an Indian version of the global online rental site Airbnb, which later pivoted to budget hotels aggregator OYO Rooms.
Today, the two-year-old OYO Rooms is valued at $400 million. It recently raised $100 million (Rs 635 crore) in a fresh round of funding led by Japanese internet and technology conglomerate SoftBank.
OYO Room’s successful run has attracted several new players into the online aggregation space for budget hotels.
“We are glad that there are 30 copycats of a brand that we created…Their problem is that they can’t innovate like us,” Agarwal said in an interview with Techcircle.in. He claims that OYO Rooms has 90 per cent market share in the rooms aggregation play.
OYO currently caters to over 15,000 rooms in 90 cities. With the fresh investment, the company is gunning for 50,000 rooms across 100 cities by the current year end.
Those offering a branded booking platform like OYO Rooms include Zo Rooms, ZiP Rooms, Wudstay, Zen Rooms and Ibibo’s goStays among others. A former executive of OYO Rooms has also plunged into the burgeoning budget hotels aggregation space by co-founding a new venture, Vista Rooms, a potential competitor to its previous employer.
Anchored on an asset-light business model, these firms are essentially aggregating standalone budget hotels, strapping them with a common brand with a promise to the consumer to offer a standardised set of amenities like a conventional budget hotel chain.
They are seen as a new breed of accommodation booking providers against large online travel agencies (OTAs) such as MakeMyTrip, Yatra and Cleartrip among others which simply list hotels of all categories.
Ruling out the possibility of acute competition, Agarwal said entry of new players will only solve the guests’ real problems and ensure that OYO’s model becomes more visible in the market. He suggested that small players would eventually have to consolidate in a bid to effectively compete with OYO Rooms.
Agarwal, who hails from a small town in Southern Odisha, believes that factors such as standardisation, trust and assurance of quality, distinguish OYO from its competitors. “The form or size of rooms on our network may be different. However, in every room you will find a bed with satin cover, a 32-inch LCD TV and warm white light,” said Agarwal, one of a few Indians to be selected for the prestigious Thiel fellowship.
He also spoke highly of SoftBank, OYO Rooms’ investor. Senior executives at SoftBank have helped the startup with insights on how to build a company for the long term.
Watch the video for details on Agarwal’s journey and his ambitious plans for OYO Rooms…